EU tries to persuade France to back U.S. free trade talks

Robin Emmott, Philip Blenkinsop

5 Min Read

LUXEMBOURG (Reuters) - The European Union will try to overcome French resistance to free-trade talks with the United States on Friday and keep alive plans for a deal that could boost their struggling economies by dramatically increasing transatlantic business.

Paris, which is trying to shield French-language culture from the global might of Hollywood, has refused to join the 26 other EU governments that want talks to start in July, unless movies and digital media are left out of any deal.

EU trade ministers must resolve the issue when they meet in Luxembourg. They need French agreement not just because it is Europe’s second largest economy, but because under EU rules, trade deals touching on cultural issues need unanimous support.

“We need to work this out. It’s about finding language that people would be satisfied with,” said Richard Bruton, Ireland’s minister responsible for trade, who will chair Friday’s talks.

Free-trade advocates Germany and Britain say it is vital that Europe push ahead with what would be the world’s biggest trade agreement, because of the economic benefits it could bring, especially when much of western Europe is in recession.

Together the United States and EU account for half of global economic output and a third of all trade.

The European Commission, which normally negotiates the bloc’s trade deals, is ready to give member states a much greater say on cultural issues in the talks with Washington, an EU source said on Thursday.

EU trade chief Karel De Gucht will propose at Friday’s meeting that the trade ministers be consulted before the Commission negotiates on audio-visual services, said the source.

First considered three decades ago but knocked down by France in the 1990s, the idea of an EU-U.S. free-trade deal has gathered momentum since last year because the United States is also achieving only modest economic growth, while China’s rise is another incentive to deepen Western integration.

A deal would essentially shape the future global trading system, something that raises concern in Beijing.

Following mutual gestures of goodwill, such as lifting bans on some of each other’s meat imports, European leaders and U.S. President Barack Obama will use a summit of the Group of Eight countries next week to mark the opening of negotiations - provided the ministers reach agreement in Luxembourg.

A trade deal, called the Transatlantic Trade and Investment Partnership (TTIP), could boost the EU economy by 119 billion euros ($159 billion) per year, and the U.S. economy by 95 billion euros, according to an EU-commissioned study.

An agreement would go much further than bringing down already low tariffs. It would also aim to synchronies U.S. and European regulations in areas ranging from car seatbelts to pharmaceutical packaging, lowering the cost of doing transatlantic business, particularly for smaller companies.

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STAR SUPPORT

Obama gave his backing in February for talks to start in earnest, and EU and U.S. negotiators say they could finish their work by the end of next year because there have already been 14 months of preparatory discussions.

“We have an opportunity to give both of our economies a major shot in the arm and to redefine the global trading system for the 21st century,” said Robert Sturdy, a British member of the European Parliament, which must ratify any final agreement.

Persuading France to agree to the talks has been the focus of the European Commission, the EU executive that will negotiate on behalf of the member countries.

Commission President Jose Manuel Barroso met European filmmakers this week, as well as actress Berenice Bejo who starred in the French film “The Artist”, to underline that their cultural subsidies and working conditions would not be at risk.

De Gucht, who met officials in Paris last month, stresses that an accord would not threaten any EU country’s right to subsidize domestic production and set quotas for film and TV.

Paris is unconvinced and says the entire audiovisual sector should be excluded from negotiations, including developing online entertainment and future technologies. Trade Minister Nicole Bricq said on Thursday she had no reason to back down.

The United States already sells the EU far more music, movies, radio and television programs than it buys from Europe. Its net surplus for the sector averaged 1.5 billion euros ($2 billion) a year from 2004 to 2011.

France fears this imbalance will only increase under a trade deal as digital and Internet services - already dominated by U.S. technology companies - become ever more popular.

The Commission and pro-free-trade EU members say excluding an industry from the talks would prompt U.S. demands for a similar opt-out such as to protect its closed shipping sector, undermining the benefits of an eventual trade pact.

Additional reporting by Luke Baker in Brussels and Nick Vinocur in Paris; editing by David Stamp